Financial institutions are forbidden to negotiate interest rates on real estate loans or loans to finance investments in financial assets like gold, securities or foreign currencies, production or business, the State Bank of Vietnam (SBV) has said.

In Circular No 1/2009/TT-NHNN issued by the central bank back on January 23, which provided that lenders and borrowers could negotiate interest rates on consumer loans and credit cards, the State Bank did not mention what sectors were banned from negotiating interest rates.

The SBV on Nov. 13 responded to rumors that commercial banks were also negotiating interest rates on loans to finance gold, foreign currency, securities and property investments, markets which all have recently become overheated.

The State Bank ordered financial institutions end such lending practices no later than March 31 of next year, requiring State Bank branches to be responsible for inspecting and verifying the compliance of financial institutions and reporting monthly to it./.